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Morning Coffee: Do banking jobs only interest mediocre 22-year-olds now? Life inside the fintech pressure cooker

The quality of new joiners this year has noticeably changed”.  It’s not exactly unprecedented for more experienced bankers to grumble about the new analyst class.  Their lack of dedication to the industry, sloppy Excel skills and unwillingness to stay up until past midnight waiting for a “pls fix” are a constant source of annoyance to old hands who don’t remember what it was like to be young themselves.

Except this year, the complaints seem to be coming from “veterans” who are barely older than the analysts they're criticizing.  The people telling Financial News, “We aren’t getting the top students” are apparently bankers with three or four years of experience – the top of the analyst class and the bottom rung of the associates.  This isn’t exactly a generation gap.

Of course, analysts who joined in the class of 2019 are a uniquely battle-hardened group.  They joined just in time to have their experience disrupted by the pandemic, and then they lived through the deal booms of 2020 and 2021 before suffering the drought of 2022.  It’s quite unusual for people to have seen a full industry cycle at such a young age, and in terms of the hours they’ve put in and the deals they’ve worked on, they’re unusually experienced.  No wonder, then, they might regard the kids who joined last September in the same way that grizzled pirates look at landlubbers.

On the other hand, if the investment banking industry is not getting the top students, who is?  They’re not likely to be flocking to crypto startups in the current climate, and although the big-tech firms still have graduate programs, neither Meta nor Twitter seem to be making themselves look like employers of choice.  Many of the other traditional competitors for graduate talent, like consultancy, big law and media are also not looking particularly attractive.

According to the grumpy 25-year olds, “Top graduates are smart enough to understand that money is not the main driver. They would rather go to a place where they can earn 20% less, but enjoy their 20s”.  But what industry is this, exactly?  First year analysts are now looking at between $110k and $125k in basic salary alone, which could still mean as much as $150k total comp even in a bad year.  Where are these jobs which pay close to six figures at the entry level, but still leave time for a relaxed midweek and free weekends?

There are no such jobs, is the answer.  And in fact, people who would be in a position to know, like the head of Oxford University’s careers service, don’t seem to believe that there’s any structural change in the kind of graduate who’s going into banking.  What’s more likely to be going on is that bankers always complain about juniors – this time last year, the grumble was that they “show up and do the comp and valuation models but don’t take it to the next level” and that they all had one eye on getting a private equity job.  It’s not that this year’s 22-year-olds are any worse.  It’s just that the 25-year-olds feel a lot older.

Elsewhere, it seems that although Thomas Grosse, the chief risk officer at German fintech N26, left last week for “personal reasons”, he might have been unhappy for a while.  A year ago, he’d circulated an “internal discussion document”, jointly authored with some other executives, with some pretty harsh feedback for the company founders about their “dysfunctional” relationship with the management team.

The company isn’t commenting on “any internal conversations, emails or other material”, and this is understandable in many ways – finance (fintech included) is a tough business, tempers fray under stress and people often express themselves in more forceful terms in internal correspondence than they might have done in the calm light of day. 

On any given day, in any given bank of reasonable size, there are always going to be some people who are, justifiably or otherwise, cross enough with the way things are going to write a letter, so it’s not wholly surprising that sometimes they do so.  N26 certainly wouldn’t have been the first fintech (or indeed division of a major global bank) to be in this situation – the question is always how you deal with it, and how you make sure that next time the differences get sorted out before they boil over.

Meanwhile …

It’s structured as a lawsuit over “trade secrets”, but the current battle between two Chinese quant funds seems to be really about the poaching of a top trade strategist, underlining how hot the battle for talent has got in this market. (Bloomberg)

If you ever wondered what happened to former Barclays investment banking co-head Rich Ricci, he’s given a “rare interview” to a horse racing website to discuss what the life of a champion racehorse owner is really like.  In summary, pretty sweet. (Daily Mail)

The European banking regulator appears to have finally lost patience with banks which haven’t met the diversity targets they have been setting since 2014, and will “crack down” on all-male boards. (Reuters)

It seems that the home/office debate has settled down into some sort of equilibrium – according to a survey of 300 financial firms, two thirds of them offer some kind of flexible working and on any given day in January, 41% of New York finance workers weren’t in their office. (Bloomberg)

According to head regulator Sam Woods, the bonus cap had “precisely the opposite effect” from that intended, which is why the UK intends to scrap it. (City AM)

Although everyone expects great things from AI in the future, the current state of the art of algorithms being used for fraud detection is pretty questionable.  A long read on the Kafkaesque nightmares associated with well-meaning projects to computerise the detection of welfare cheats. (WIRED)

Previously, psychologists had claimed that once you were making $75,000 a year, there was no real benefit in happiness terms from earning any more.  That’s now been revised up to $500,000, suggesting it’s worth getting promoted to Executive Director but not MD. (Bloomberg)

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AUTHORDaniel Davies Insider Comment
  • Au
    9 March 2023

    I believe this is self inflicted. I know many talented, hard working, qualified people who want to get a job in banking but can't because the entire hiring process for entry-level jobs is broken. These days, candidates have to sit hours of aptitude, personality, and situational judgement tests, as well as online virtual video interviews where they are asked inane questions, before their CV is seen by a real person. These tests get rid of the majority of candidates. For the personality and situational judgement tests, it's not often clear what is objectively the best response. It seems very random who makes it through. I don't know how banks can be confident they are getting the best people with this system.

  • Tu
    9 March 2023

    At this point, almost everyone staying at IB post associate level, is because they could not get to the buyside and they are not that good at their jobs. In terms of entry level, it's all about women and colour diversity. If you add personal connections of rich kids to the mix, of course you will not get the top analysts duuuh. IB makes no sense as a job anymore i dont even understand why it is discussed so much

  • Er
    8 March 2023

    A lot of good candidates are being put off or barred from joining the industry due to formal or informal diversity quotas. This isn't recognised or talked about enough.

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